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Gong Xi Fa Cai !

February 2016

PhiChem will host an Open House to preview its new 45,000 square meter Global Headquarters and R&D Center in the Baoshan district of Shanghai for invited guests during SEMICON China 2016, CPCA 2016 and Productronica China 2016. PhiChem, a public company known as China’s leading supplier of UV curable coatings for fiber optic cable is also building a strong reputation with its printed circuit fabrication and SMT products, its 99.999% pure Al2O3 for the manufacture of synthetic sapphire, and a new line of products for the manufacture of LEDs and flat panel displays. Chairman Dr. Jin Zhang stated that the company will provide transportation from the show and back mid to late afternoon on Wednesday, March 16.

Expanding focus for the future - filling a void?

SEMI launched the European Semiconductor integrated Packaging and Test (ESiPAT) Special Interest Group (SIG). The SIG represents SEMI members who have semiconductor packaging, assembly, test manufacturing, or design activities in Europe. The purpose of the SIG is to foster collaboration among companies and to collectively raise the profile and reinforce the semiconductor back-end industry in Europe. Activities will include: Mapping and reporting capabilities and capacities of European SiPAT members; identifying gaps in the European back-end supply chain relative to other regions, and building project consortia and bidding for European funding
Additional chapters in North America and Japan are currently under development.

Congratulations to IEC on its 50th Anniversary!

IEC (International Electronic Components) founded by Sam Eidel and Jim Stone will celebrate its 50th anniversary at the IPC APEX EXPO on March 15.  Shawn Stone, Jim's son, took over in time to steer the distributor of PWB materials, specialty chemicals and equipment through the turbulent times and major market shifts of the past few decades. IEC was the first to bring a major Cu-clad laminate line to Canada from Taiwan establishing the country's first facility to cut laminate, sheet, and to tool and package prepreg with CNC and other automated equipment. It provided dry film photo resist and electroless Cu plating systems for the fabs "North of the border". In 1998 Shawn formed IEC USA with Chuck Williams and has since  expanded coverage with 7 warehouses across North America and laminate conversion facilities in Chicago, Santa Clara, and Toronto. IEC is the first supply chain company to import  UL approved photoimageable solder masks from China.

The IPC launched a new web site and stepped up activities to recruit new members for its Political Action Committee (IPC PAC). The IPC PAC's mission ism to grow so that it can support pro-manufacturing candidates who share the IPC's views on key policy issues.

In the face of falling film usage for photo tools due to the rapid increase of direct imaging, Agfa Materials (Belgium) promised to continue the production and the support of its films. Agfa expects that during the next five years none of its Ag photo tooling film volume will decline to a non-profitable level.  A company spokesman said, "We can guarantee the supplies." The company also committed to providing 12 months notice if it plans to discontinue any  particular film.

The first half of 2016 will continue to be a challenge for those in the electronics manufacturing markets. Slowing economic growth in China and weaker emerging markets are lowering sales of products ranging from TVs to personal computers to smart phones. This bodes ill not only for major OEMs, but also members of their supply chains. Reports from China indicate spotty business from the PCB suppliers of materials and equipment. This bodes ill for not only the suppliers, but also for the broader industry.

How does one buy a company in Japan where the culture has usually dictated that companies not sell out to foreigners? Easy. Just bid more than twice as much as the domestic competition. That's what Foxconn did to move ahead of competitive bidder Innovation Network Corp. of Japan (a publicly backed concern) to move into prime position to take over Sharp. It just took $5.5 billion. (Foxconn's annual sales are $125 billion). The deal will provide a major step in vertical integration for the manufacture of smart phones, tablets, TVs, etc.

January 2016

A challenge - looking forward to 2016 and beyond

Are you ready for rapid changes in global manufacturing shifts? Are you prepared to seize opportunities arising from new innovations? Are you part of the current mega-merger trend running through the entire interconnect supply chain? Are larger customers and prospects by-passing you because they are uncertain of your future and sustainability? What are your plans for the future? Have you modified your goals (markets, financial, business, products, services)? Is your factory and its equipment aging and outmoded? Have your suppliers vanished? Has the technical support once provided to you diminished or disappeared? What are your plans to compensate for changes in YOUR supply chain? Are you having difficulties in gaining the attention of prospects for your innovations because you are too small or too new? What type of support (supplier, customer, trade association) do you think that you need to grow? What ideas do you have for the future?

Will Taiwan's election of Tsai Ing-wen as its first female president reverse the tone (and cross straits investments and trade)  set by the recent handshake between Taiwan's former President Ma and China's President Xi in Singapore last month? Tsai's pro-independence party also gained its first majority in the national legislature,  rejecting the China-friendly party that has ruled Taiwan for eight years. Tsai promised to reverse Taiwan's  technical sector downward value trajectory of the last 9 months.  Taiwan's electronic exports  have been declining  since February and  its GNP contracted partly due to woes in the electronic sector. 

Small and medium sized companies are critical parts of the electronic supply chain in China, too!

China's Ministry of Industry and Technology will set up a $30 billion fund in partnership with Ping An Bank to support the country's electronic supply chain. This follows the recent factory closings of a number of small and medium sized enterprises that supplied major OEMs such as Huawei and ZTE.  This new fund appears similar to the one established 2 years ago to increase the size and technology level of the country's IC industry. The latter has been used to buy foreign chip companies and invest in foreign semiconductor technology.

Philip Carmichael, President of the IPC in China, will lead a Chinese delegation of 45 to the IPC APEX EXPO in LAs Vegas in March. It will be composed of 60% assembly (SMT) people, 20% printed circuit fabricators, and 20% equipment and material suppliers.

Gartner forecasts a decline in global purchases of semiconductor equipment in 2016 of 4.7% to $59.3 billion before rebounding to $63.6 billion in 2017 and $69.2 billion in 2018. Capital equipment spending in 2014 was $64.6 billion and $62.3 billion last year.

More than 540 companies exhibited at SEMICON Korea in Seoul.  South Korea is expected to spend more than $8 billion for front end fabrication equipment this year making it the 2nd largest fab market in the world. Materials purchases are expected to top another $7 billion in 2016.

The following may be of help

Are you an independent board fabricator that feels overwhelmed by the industry consolidations? Do you need a new approach to improve your competitiveness? Do you need a way to better access large potential accounts? How can you gain visibility for your unique capabilities? How can you find working partnerships to develop new products? How can a smaller company wade through the tremendous maze to gain government contracts?

What is the single most important thing YOU need to help YOUR business succeed in 2016? How can a trade association help fill these needs? How can an IPC membership help you face the challenges of 2016 and beyond?

Come to the IPC’s Town Hall Meeting at the IPC APEX EXPO show in Las Vegas in March 2016 and find out. Ask your questions. Tell IPC what they can do to help YOU succeed.

Contact Tracy Riggan (TracyRiggan@IPC.org) or Sanjay Huprikar (SanjayHuprikar@IPC.org) if you have further questions about this special event or visit www.apexexpo.org for more details. 

Send us your comments. Share your thoughts. Perhaps together we can find some new solutions and opportunities.  

Consider this

There was a time when companies in the U.S. comprised a significant part of the world's production. The members of its domestic supply chain spread their technologies throughout Asia and Europe by seeking out and responding to  distributor organizations. Now that the PCB center of gravity (both fabricators and suppliers) has shifted to the Far East it may be the time for those still building and assembling boards in America to  reverse roles in their supply chain structures to remain relevant.

Do NOT count on re-shoring to help you! A recent report , the A.T. Kearney U.S. Reshoring Index shows that   in 2015 it declined in the U.S. for the 4th year in a row.

The German PCB manufacturer GGP Schaltungen GmbH applied on JANUARY 4 for insolvency proceedings to begin. "GGP continues to produce and deliver without restrictions and our customers and suppliers have already assured us of their full support", said Thomas Peters, CEO of GGP, on January 7, 2016.  A company spokesman stated, "The very extensive (and inevitable) investments into the modernization of our machine park have ultimately let to debt service, which we were unable to generate against the low-margin competition in Asia."

The EIPC will  holding a workshop on Metallization & Surface Finishes at the Frauenhofer location in Berlin on February 17. Paul Waldner of Multiline International Europe will chair the workshop as well as make a presentation on additive as well as semi-additive processes in behalf of eSurface.

Intersolar Europe 2016, the world's leading exhibition for the solar industry and EU PVSEC, the world's largest conference in the field of photovoltaics, will be held at the same time and in the same location as Intersolar Europe in Munich  in June, 2016.

EZchip Semiconductor agreed to a roughly $800-million offer by fellow Israeli chip designer Mellanox Technologies, marking one of the biggest deals signed in recent years in which both parties were Israelis. That is nearly double the Israeli-only M&A $476 million annual average of the past 10 years.

Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest foundry, will increase its capital expenditure this year to $9 - $10 billion. The company expects to complete process and product qualification for 10nm chips during the first quarter this year, and is on schedule to start production at the 7nm node in 2017. Chairman Morris Chang said it’s likely that revenue growth for the overall semiconductor industry will fall in a range of 2 percent to 3 percent for the next five years. TSMC plans to start production of 5nm chips sometime in 2019, about two years after it launches the 7nm, products. The company will likely use extreme ultraviolet (EUV) lithography to make 5nm chips and is installing 3rd generation of EUV equipment to do so.

Mega mergers continue to surge in spite of  a shaky market

Johnson Controls is reported to be in advanced talks to merge with Tyco International. The deal that could be valued at high as $20 billion signals that recent market volatility won't derail a surge in takeover activity. The new company will make Tyco's location in Cork, Ireland its legal and global business headquarters.  The tax inversion will save $!50 million in taxes annually as Ireland's corporate tax rate is 12.5% while the U.S.' is up to 35% - the highest  federal tax rate of any developed country.

Foxconn, which assembles most of the world’s iPhones, is reported to have offered about $5.3 billion to buy the troubled Sharp Corporation. Japanese officials have expressed concern about letting Sharp, and its advanced display panel technology come under foreign control. Foxconn’s high offer is said to be designed to make the deal economic and not political.  Meanwhile, the company, also known as Hon Hai, will lay off 320 at a TV plant and 480 at a mobile phone plant in Brazil. The latter makes cell phones for SONY Mobile which is experiencing low demand for its products.

Haier Group, the world's biggest home appliance maker, is buying General Electric's (GE) appliance business for $5.4 billion. GE has been well-known in the major appliance business for   more than a century. This was  the third Chinese multibillion-dollar foreign acquisitions announced in January.

December 2015

2015 will be remembered as the "year of the deal"

Global M&A activity totaled more than the prior 5 years combined ($3.5 trillion - more than $125 billion in just the semiconductor industry). Specialty chemical companies merged or announced their intentions to do so to form a few powerhouse supply-side giants for the interconnect industry. Merger mania joined several of the largest fabricators to form the biggest board house. Smaller operations began to really feel the pressure to change to survive - but in what ways? It is the year that redefined the industry as smart IoT "broke out", automotive electronics began to surge, and printed electronics may have found a new route to success through wearables.

Meanwhile, another major change to be noted that will affect the future  is China's renewed national investment policy and funding designed to generate greater self-sufficiency

Rogers Corporation sold Arlon Electronic Materials to CriticalPoint Capital LLC. CriticalPoint is an investment firm  based in Southern California. It focuses on companies with revenues less than $100. Arlon EMD will continue to operate out of its Rancho Cucamonga location.

Unimicron Technology’s Board of Directors has approved plans to budget $152.9 million in capital expenditures (capex) for 2016. Its capex exceeded $300 million in 2013 and 2014, and is expected to total $300 million this year, too. The PWB and IC substrate maker reported net profits of $4+ million for the third quarter of 2015, ending a run of three losing quarters in a row. Unimicron is “reported” to be one of the any-layer HDI board suppliers for Apple’s next generation of iPhone.

Unitech president Hsu Cheng-hung stated that any-layer PCB demand for auto and IoT applications will rise in 2016. This will help offset declining demand for smartphones circuits. He stated that the company will expand its production capacity for any-layer PCBs by 10% at its Yilan site during the next quarter. Any-layer PCBs account for 25% of Unitech's total revenues and HDI boards account for 40%. Unitech’s capex will exceed $45 million in 2016.

A fire broke out at Tripod Technology's Taoyuan facility on December 21. The facility is dedicated to the manufacture of PCBs for optoelectronic, notebook and memory module applications. It is not expected to impact any of Tripod's shipments or schedules, according to a report in DigiTimes. The Taoyuan facility accounts for just 3% of Tripod's overall production capacity The company's other facilities will make up for the production shortfall caused by the fire.

According to IPC 's 2015 Analysis and Forecast for the North American PCB Industry report the North American printed circuit board (PCB) market is expected to improve in 2015 and grow modestly through 2017 following declining sales for the past four years. The drop to 5% of the world’s production, primarily in rigid boards, was not offset by strong increases in flexible circuit demand of the past 3 years.

The final passage of legislation in the U.S. to permanently extend the R&D tax credit will benefit the chip and board business in America providing continued incentive for innovation "at home. It should greatly benefit the semiconductor industry which spends about 20% for its revenue for R&D.

The global automotive PCB market size to grew approximately 6.5% this year to more than $5.2 billion. 

Show time!

The International Printed Circuit & APEX South China Fair held in Shenzhen was crowded from the opening day into the final morning. Its record number of  531 exhibitors occupying 51,000 square meters with 2,379 booths spilled over into a 3rd hall.  Final attendance exceed 40,000.

Though business has slowed and the future uncertain there was a high level of energy with both the exhibitors and those seeking information on new and improved products as well as systems for automation.  It was interesting to see the proliferation of direct digital imaging systems (mostly LEDs). We counted over a dozen.

As expected, we did not find much that was dramatically new, but there were many improvements. One of the offerings of great interest in this day of increasing flex manufacturing was the horizontal reel-to-reel processing equipment shown by Grown's Electronic Technology Co., Ltd. of Shenzhen. The 10+ year-old company's automated un-wind/wind system appeared suitable for many applications including coating, dry film resist lamination, plating and etching.

Orbotech’s booth was busy, as usual. The company showcased its recently launched Orbotech Diamond™ 8 Digital Imaging mass production system for solder mask. This product joined the recently introduced, high accuracy Nuvogo™ 1000 DI system for flex solder mask applications.
Also on display, running live demonstrations, was the Sprint™ 200 Legend Inkjet Printer system capable of providing 95 prints per hour of white legend ink. The company also demoed a new laser repair station, the Ultra PerFix™ 120 , which removes excess Cu defects to improve yields.

Many attendees were seeking information on new industry directions as increased costs and overcapacity have initiated a migration of fabricators of lower tech boards to lower cost areas. Great interest was expressed in the next generation of wearable electronics which gave a boost to new equipment and materials as well as processes for flexible circuits and displays. We believe that continued drive to put more on a chip, new stacked chip designs and packages indicated future growth for packaging than for circuit boards in the immediate future - even though global purchases for semiconductor equipment has slowed in recent quarters.

Some fabricators from the "Western World" faced with the need to recapitalize (and digitize) their outmoded equipment of the 1980's and 1990's bemoaned the fact that they could not readily see what was truly available "back home" nor could they find "local support" for some of the offerings shown in China. The cost of updating and modernizing was also stunning to some. Other board builders from the U.S. Midwest were seeking ways of buying photo imageable solder mask, primary imaging resist, and Cu-clad laminates directly from Chinese specialty chemical and material companies - at a lower cost than is currently available from more "conventional" sources.

The ‘Smart Automation Pavilion’ focused on the developments of Industry 4.0. It fit well with the show's global theme. It demonstrated how automation can improve production efficiency and quality, virtually making a factory system competitive anywhere in the world.

Hall 2 (and Hall 3 filled with overflow from Hall 2) had many Chinese specialty chemical suppliers showing what appeared to be replicas of the "standard" products of DuPont, MacDermid, Taiyo, Atotech, Dow, etc.  Stories were told of some of the mid-size to larger American fabricators buying Chinese made solder mask, dry film photoresist and other supplies at lower costs than could be obtained in the U.S.

HTC and Huawei both are expected to launch their respective new smartphones in the first quarter of 2016, according to a Chinese-language Economic Daily News (EDN) report. Both will have large display's. The new HTC One X9 will also have a 13 megapixel camera with image stabilization.

Is there a problem?

Chinese smartphone maker Meizu’s shipments will reach over 20 million units this year, up over 350% from 2014. Vice president Li Nan stated that Meizu will shift its focus to improve user experience and satisfaction in 2016 instead of boosting sales. He said that Meizu will to ramp up its smartphone shipments by 25% to 25 million units in 2016. He also stated that the company looks to make a breakthrough in high-end models.

From a colleague at SEMICON JAPAN

The hottest topic of discussion at SEMICON Japan 2015 was the IoT (Internet of Things) with new applications for sensors (such as a 3D sensor), CCD module, RFID, big data management (such as the Cloud), smart robots, driverless cars, and Pepper (a "smart robot" - with a heart) - already on sale! 

Technology talk at SEMICON included 3D wafer level system integration, copper through silicon vias (TSV) formation, wafer thinning, thin wafer handling, TSV-interposers with high density redistribution and assembly, interconnection technologies, and SIPs (Systems in a Package).

Also discussed were FOWLP (Fan Out Wafer Level Packaging) and PLP (Panel Level Packaging). These will grow in use due to increasing multifunctional demands. As a result more circuits will be designed into the chips eliminating the need for some PCBs. Apple is reported to already have approved this technology for their A10 project (I-Phone 7). TSMC is one of the suppliers already qualified by Apple. ASE, UMTC,Uni Group (China), and Samsung are all reported to be trying to get approval by Apple for this technology and application.

The global automotive PCB market which was approximately $4.96 billion in 2014 is expected to grow by 6.5% to $5.28 billion this year. The overall global PCB market of roughly $60 billion last year will achieve an estimated growth of 0.8% this year.